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Chit Chat Stocks
Meta, Microsoft, and Tesla; Silver/Gold and Dollar Debasement; Burry's Wild GameStop Pitch $GME
01:07:06
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- [00:00]
A
This episode is presented by Interactive Brokers. You research your investments, but did you research your broker? In 2025, IBKR retail clients averaged a 19.2% return, beating the S&P 500's 17.9%. Over time, the broker you choose makes a difference. If you want to learn why, head on over to ibkr.com 2025. More on this later in the show. Welcome to Chit Chat Stocks, a podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined as the one and only Brett Schaer. Today we've got our weekly Power Hour episode where we talk all things financial markets and it is earning season, so we've got plenty to discuss. Microsoft just reported an hour ago as of this recording Meta reported Tesla reported this might be the biggest day for the quarter actually. But yes, we do these live every Thursday at 5pm Eastern Time on YouTube. So if you ever want to ask us any questions, head on over to Chit chat stocks on YouTube and at 05:00 Eastern Time on Thursdays, we'll be going live so you can ask us any questions in the comments. Brett, where do we want to start?
- [01:10]
B
Well, did you say that this one was Wednesday? I was doing some work putting up our, putting up our thumbnail. This one we are doing Wednesday, so it is a day before but it's. How about our rule, 90% of them are on Thursdays and then if we have something in our schedule, it'll be Wednesday at the same time. Either way, it comes out early Friday morning East coast time.
- [01:32]
A
But always publish to the podcast players on Fridays. Just over time.
- [01:36]
B
Yes, yes, yes. Let's talk, let's talk Microsoft. There's just so many earnings to go through. I do want to save time though for at the end of the episode, maybe Burry's. I don't even know how to describe it. Intricate pitch for GameStop. It was kind of out of the blue, very, very surprising read. As well as what's happening in gold, silver and the devaluing of the dollar. But before we get to all those, we have so many earnings to discuss. Ryan, what happened to Microsoft? I didn't even look. I'm seeing you have a chart here. Your friends, your team at Fiscal AI updated it. The capex is literally going off the chart that you have on my screen here just about.
- [02:19]
A
Yeah, yeah. It was a bit of a bizarre quarter for Microsoft. Kind of a mixed bag. The I should give a shout out to Fiscal AI because the numbers were up really quick today. So if you're someone that likes to watch earnings very closely and pour through all the numbers like immediately after. I know that not everyone does that, but some of us do fiscally is super helpful tool for it. If we go by segment, it looked pretty good across the board. So Azure, which seems to drive most of the business grew 39% year over year. That's Azure and other cloud services is what they group it as. Microsoft 365 consumer up 29% Microsoft commercial up 17%. LinkedIn up 11. Dynamics 365 which admittedly I don't know that business super well. Up 19% Windows up 1% Xbox minus 5. So Xbox is the only business for them, only segment that wasn't growing. I gotta say, Bobby Kotick over at Activision timed that departure perfectly. Selling to Xbox. I think they, Microsoft might have got left with a bag there.
- [03:38]
B
Yeah, the Moneyball as they say. Right. He's one of the. The most surprising acting role I think I've ever heard of my life. Do you remember this Ryan? Are you.
- [03:49]
A
He was a money.
- [03:50]
B
Yeah, he was the owner of the Oakland Days.
- [03:54]
A
Really.
- [03:55]
B
Yeah, that's right. Absolutely fascinating. Him and Brad Pitt chopping it up in the acting room, that is. And he was good. He was good at his job. But yes, I agree, Bobby Kotick, a lot of people have poor opinions of. But as a capital allocator and timing the market quite good and it might be time for Microsoft too. I'd say just maybe get rid of this thing, sell it.
- [04:18]
A
I know it just kind of treads water and I just imagine it's a bit of a drag on costs because I don't know, I've been in and out of the gaming industry as an investor probably for the better part of the last five years. And hyper competitive Xbox is kind of, I don't want to say in no man's land, but they've got some. You would think it's a better business than it is. That's. That's probably how I'll leave things. But the thing that stood out here was there must have been. I don't know if this was one transaction with OpenAI or what exactly happened here, but the commercial remaining performance obligations, which is basically their cloud backlog.
- [05:10]
B
Grew.
- [05:10]
A
From $392 billion to $625 billion quarter over quarter. So it grew 110% compared to last year. This is like what we saw with Oracle where it's basically just one big commitment, I'm guessing from a single customer it's gotta be OpenAI. I don't know who else would commit to that.
- [05:31]
B
Who else would commit. Yeah, that audacious number. I will say there was an article these are developing here. I saw either earlier this week. It was probably late last week that Altman was in the desert. I think we talked about this on the show trying to raise money, trying to raise $50 billion from some of the Gulf states and we'll say also at the same time Saudi Arabia is trying to raise funds from other Gulf states because they're. Do you remember those projects I would follow for kind of a joke segment the line, all the resorts, the futuristic. The skyscraper that was going to be 30 miles long. It turns out that hasn't worked out and they might need some money but Altman I guess is not getting what he wants there and he. I don't know who dropped it but there was an article in the Wall street journal that SoftBank is in talks to invest 30 billion more dollars into OpenAI. So second choice to the Gulf states. But maybe Masa sun will. It feels like a very Adam Newman move. Again we've mentioned that but that's where these commitments come from. If those don't come through these remaining performance obligations, I mean are, are worthless.
- [06:50]
A
Yeah. And I think they are like most people, I don't think that's what most analysts care about for, for the business. I mean they're like the cloud growth is good and they have, you know, real earnings to show for. So it's not like Microsoft's just clinging to this and it's. Microsoft didn't. It's not like they bragged about this like Oracle.
- [07:11]
B
Different than Oracle.
- [07:12]
A
Yeah, yeah. This was just kind of an accounting have to. I guess like if you get that much of a commitment from OpenAI you have to put it somewhere and I guess it's belongs in your commercial remaining performance obligations. But the part that caught me off guard and it seems like caught analysts off guard as well. Capex grew 89% year over year. So and maybe you can share the chart but for anyone listening it's basically here are the quarterly Capex figures for Microsoft for the last two years. 11 billion 14 billion 1516 billion 17 billion. 17 billion 19 billion 30 billion this quarter. So just a massive quarter over quarter jump. I don't know. I got to listen to the conference call because I don't know what happened. I don't know what caused this but investors seem to be souring on the Capex plans a little bit because the stock was down after hours despite beating sort of across the board on the top and bottom line. Is this the like a memory chip supply shortage? I've heard that that's causing a lot of increase in capex budgets.
- [08:29]
B
Okay, maybe that could be incremental. I would, yeah, I would be curious what the dollar amount is versus like all right, the same time a year ago, what was the same like per data center or per. Maybe I don't want to. How you describe a unit of chip capacity or something like that or per supercomputer, however you want to describe maybe that is going up and we have as you're right, we have seen memory prices rise. I think maybe this is one of those moments where investors are going, all right, that ROIC better show up. These are some large numbers because man, that revenue on the back end better be there. And there is nervousness around OpenAI burning so much money every year. I think compared to Amazon and Alphabet. Microsoft is in a little trickier of a situation where they could put in a bunch of capex. OpenAI sure is the dominant player today in usage, but their losses are nothing to sneeze at and the projected losses are nothing to sneeze at. So if things go wrong, Microsoft could see quite a bit of an overbuild I would guess. And that's maybe what investors are thinking about, hey, you know, whoa, $30 billion a quarter, that is quite large and I think, I don't know if you put it again, this happened an hour before we're recording. So we're trying to get all the information as quickly as possible. I believe Meta is guiding for well over $100 billion in capex this year. So the competition is going to continue and I could just see investors get nervous about that.
- [10:09]
A
It is, I mean the music keeps playing for the AI infrastructure like in investment theme. If you own memory chip stocks, if you own hell, Nvidia, some of the other players too, any of the ancillary ones that like provide sort of the picks and shovels providers for the infrastructure. So like amphenol stuff like that. As long as CapEx forecasts continue to increase each quarter, I think the music will keep playing.
- [10:50]
B
That is the music right there. Yeah, that is playing the music we have. Thank you for the comment there. I don't know why I didn't respond there, but I wanted to say thank you. Don't know who was commenting, but they said the guide for Meta was $115 billion to $135 billion for 2026. That is a huge Jump. Especially because they don't have a third party cloud service.
- [11:15]
A
Yeah. Now I will say the advertising growth for Meta is really strong. The like ad impressions grew 18% year over year on top of pretty good ad impressions growth last year. This is, it's, it kind of shocks me how how much ad impressions can grow for Meta every quarter because.
- [11:42]
B
And.
- [11:43]
A
Maybe this is a testament to their platforms that the ads have almost become like just like integrated with the experience. But it feels like a heavy ad load to begin with and they're still finding new places to deploy these ads. Part of that is the people on their platforms continue to grow. So daily active people still growing 7% year over year, which just boggles my mind. They're at almost 4 billion people.
- [12:12]
B
The, a lot of those are very, at this point are very, very, how should I say it, not valuable people as they're the kind of the lower end of the GDP per capita areas, lower end of the income per capita areas that are just getting their smartphones. But I agree, I mean they're still growing. That's one of the areas. I guess I've never really spent any time on Instagram so I don't know with any personal experience what like how it works, but it feels like perfect place to have advertisements and at some point you go, oh, there's too much ad load. But they keep optimizing that algo and I guess this is where the return on that Capex is coming. But mentioned here they're seeing a big contraction in margins. What, what were exactly the figures there? Do we have those on fiscal yet or is that something that they should.
- [13:05]
A
Be up there already? Yeah.
- [13:06]
B
All right, let me check. Are you talking gross or operating?
- [13:11]
A
Operating for sure. I assume gross margins contracted a little bit too. Headcount grew a little bit, but it shouldn't have been. I think headcount only grew like 6% year over year, whereas revenue is growing 24%. So I'm not 100% sure what that is there. Maybe it's the depreciation of all this Capex, but we'll see.
- [13:31]
B
Well, okay, so I think if we look at the margin, it's kind of been normalized at 41% but last quarter, sorry, last year in the same quarter was at 48%. So year over year it's down a lot. But it's been around the 40% range since September 2023.
- [13:48]
A
It is, I think of all the CEOs, the last one to throw in the towel on Capex plans would be Mark Zuckerberg.
- [14:01]
B
Like yeah, they're still spending. Reality Labs losses are still growing.
- [14:06]
A
If everyone want like let's say a year down the road all the big tech companies say shoot, we over built. Meta's going to be the last one to, to admit it.
- [14:19]
B
I think we have a comment that says 115 billion is larger than their operating cash flow or close to it.
- [14:27]
A
That's insane. Yeah, that's, that's truly insane. It this here's the thing for like micro, let's go back to Microsoft for example. I guess Meta at least they have a very good gauge on like consumer demand because they're building it for their own applications. Whereas although I will say they don't know what usage is going to be like for Llama. So maybe they are grossly overestimating their like model usage.
- [15:00]
B
But I would project low.
- [15:02]
A
Yeah, Microsoft TSMC reported last week and they talked about how, how much attention they are paying to true customer demand. Like they're going to the customers making sure that the AI is improving their businesses and it's worthwhile for them to keep increasing capacity. I wonder if Microsoft's kind of just thinking well we see strong demand everywhere. Let's just increase, let's spend as much as we can to increase capacity and we'll fill it up somewhere whether it's OpenAI, whether it's our own services.
- [15:38]
B
What happens if everyone thinks that though?
- [15:41]
A
I know and I can't. I could totally be wrong. I'm sure they've done more analysis than I'm talking about here. But God, why can't, why can't they just add capacity slowly? They're afraid they're going to miss out on the race, the race to AI greatness.
- [15:59]
B
I'm sure OpenAI wants more capacity. I'm not exactly sure on that that front. I would think if you're OpenAI though you should. Now this puts you in a tough position competing with Alphabet. Wouldn't you want to raise prices on your heavy usage tiers? But then you maybe people switch to Gemini. I'm not exactly sure. It's a tough, it's a tough position because everyone kind of has knives out and they're getting very defensive but they have to go on the attack. I think you understand what I mean. No, the fact that everyone's going full in here makes it tougher for everyone else.
- [16:40]
A
Yeah.
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B
And it really starts with OpenAI and the company in the most difficult position is probably TSMC because they have to contract and predict on a multi year period on what their capex is going to be because if they start constructing a factory now it will be ready in two to three years. So all their capex this year or most of it like for the beginning of a construction he's not going to show up until 2028. So they have to think that the party is going to keep continuing until then. And that's why TSMC is probably the most numerous where maybe Microsoft, Amazon, Meta, why am I putting together Alphabet can maybe slow down faster, who knows.
- [17:24]
A
Yeah, I'm just kind of stuck in no man's land with these companies. I don't know what. Well Microsoft has always, it's felt a little expensive to begin with but like Google right now it basically puts this massive question mark on a business that was otherwise like so easy to own. And I guess at least with Google they've got very easy ways to monetize it. But like it's bizarre to me that if Google didn't have all this capex I think it might still trade at a similar multiple. Yeah, maybe, but people wouldn't you think you're, wouldn't you think investors discount it because it's like and I'm saying this for Google but it applies to Microsoft and Meta and stuff. Wouldn't you think the investors would be concerned by the capex spend and like give it a discount on the multiple because of that?
- [18:28]
B
Yeah, yeah, I agree.
- [18:31]
A
Would you buy any of the big tech stocks today?
- [18:35]
B
I'd buy Amazon. That's it. You research your investments, you analyze markets, you manage risk. But did you research Your Broker? In 2025, IBKR clients outperformed the S&P 500. Retail clients averaged 19.2% while hedge fund clients averaged 28.91% compared to the indexes 17.9%. IBKR's lower trading costs, competitive rates, efficient execution and access to more than 160 global markets helps investors keep more of what they earn and put more capital to work. Over time the brokerage you choose makes the difference. If you care about performance, find out why the best informed investors choose. Interactive brokers@ibkr.com broker 2025 Interactive Brokers is a member of SIPC.
- [19:27]
A
Speaking of headcount reduction, 16,000 layoffs. See that this morning?
- [19:31]
B
I did, I did. They have so many employees still from the 2020, 2021 hiring spree I think their corporate headcount was like 300,000 across the world. So when you see a number like that and I think it was 30,000 in total because this was part of the plan from October I think was 14,000. Yeah. I wonder what divisions they are. And I saw they're shutting down the Amazon Go stores. I think that's a good sign. That was kind of a road to nowhere. But then another thing I saw is they're starting to test grocery stores that are hybrid delivery centers that are twice the size of a Target.
- [20:21]
A
Yeah, that's massive.
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B
I know, seems too big to me, but. Well, we'll see. Well, I mean, if they're hybrid, their whole thing is Anthropic.
- [20:30]
A
Yeah. Speaking of, maybe we can talk about that now. Amazon has massive investment in Anthropic. And as I was looking at this, so we talked about this last week on the Power hour, but anthropic OpenAI SpaceX, they all have like rumors about potentially wanting to go public.
- [20:54]
B
And the valuations, $500 billion.
- [20:56]
A
Yeah, yeah. The valuations are getting extreme. The Anthropic, I believe, actually raised money earlier this year or planned to raise money at a $350 billion valuation and was like the round was oversubscribed. So it sounds like they're going to be raising a 350 billion dollar valuation. Amazon, with their massive stake, I think it's 15% stake in Anthropic is going to get a big increase in Gap eps because the mark to market on their investment portfolio. As I was looking at that, I saw Zoom also has a big stake in Anthropic and. Well, it's not big for Anthropic, but it's big for Zoom. And I assumed because Zoom Stock was up 18% in the last five days because apparently some investment bank wrote a note mentioning the stake in Anthropic and I realized the world just didn't know that Zoom, I guess, had a stake in Anthropic. Like a bunch of investors never knew that. I guess I honestly didn't. But apparently the stake was made or the investment was made and publicized in 2023, so this isn't new information. It was. They've had a stake since 2023. It was like a $50 million investment. Today it's estimated to be worth between 2 to 4 billion dollars. Last week, Zoom had a market cap of 16 billion. So potentially 25% of their market cap was.
- [22:37]
B
And it could be higher.
- [22:39]
A
It could.
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B
I think their EV is down to. Is well below that too, at least according to fiscal. And Zoom's market cap now is 24 billion. So it's gone up quite a bit on this news, especially as Anthropic, I think, raised their guidance for revenue for this year to something like $50 billion, which is quite insane. The number could be wrong. I don't have that in my notes. But it's interesting, that's for sure. I saw someone say that if you're not long Zoom, you're short Anthropic. Could be true. Yeah.
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A
Honestly, this might have been the best.
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B
Way to play it.
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A
That might have been one of the best ways for public market investors to get exposure to Anthropic if they wanted to buy it. Because you were probably buying. I'm guessing it couldn't have been that expensive, Zoom on a cash flow multiple prior to this, because they've been kind of bombed out. Maybe I'll double check here on fiscal. But I assume you're buying 12 times. Yeah. Okay, so it was probably about 10 times last week. You're buying Zoom at like 10 times cash flow and getting this massive stake in Anthropic alongside it. And I looked. Apparently they also have a stake in Core weave. Zoom does $175 million valuation.
- [24:02]
B
Roughly less optimistic about that one, but could be worth something.
- [24:07]
A
Well, I mean, I guess that one's easier to Mark, right? It's easier to get rid of.
- [24:12]
B
True. Yeah. Maybe we'll think about a divestiture, you know, but what else they got Perplexity.
- [24:18]
A
They own some perplexity. I'm not sure the value on that one. But I guess my question is, and honestly, we're probably going to see next year. I would guess we see a whole bunch of big, like EPS surprises, like Gap earning surprises from Mark to market assets on these AI investments. And this quarter, not even next year. I bet you'll see it with Amazon. You'll see it with Zoom. You'll see. Probably see it with Wix and their base 44 acquisition.
- [24:51]
B
You know who invested in Anthropic really early through his defunct company, Sam Bankman. Fried Freed from Freed. Yeah. He's sitting there in prison. Like, once I get out, once I get this pardon, I'm gonna.
- [25:13]
A
Didn't he end up in just. Yeah, they did. I think it was because of a lot of his. Like his investment fund.
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B
Well, they invest in Robinhood, which has done well. They invested in Anthropic, but I believe it was also because of the recovery of the price of Bitcoin, mainly and other cryptos.
- [25:31]
A
Okay. The. I guess my question to you is how do you feel about public companies having these big VC funds?
- [25:41]
B
If they're good at it, that's good. Some stuff. Strategic. You could look at strategic investments from someone like Amazon into Rivian and things like that, where you can have a relationship for your business or one of your cost centers. So some companies are good, some companies are bad. Zoom seems to have at least an early tracker that's good. The best by far. And people, you know, know, I love this company. But Google, Google Ventures has been phenomenal. I think they own 8% of SpaceX. It might be diluted at the IPO, but that could be worth $100 billion at the IPO. I don't know if it's worth $100 billion, but it could be marked at $100 billion this year. It feels things are getting exciting. Is it the blow up top? You know, it's hard to say, but things are getting fun.
- [26:33]
A
Yeah, honestly. And I guess you could make the case that for Zoom, like for big tech, it makes sense. There are strategic reasons to give the EV company $8 billion or whatever. It gives them capital to invest in their fleet, which ultimately helps you, and then you sign like whatever, an actual business deal with them as well. I think you've seen that probably in some of these circular AI deals also. But.
- [27:04]
B
Well, yeah, Nvidia and Core, we've have some, I'll say some dirty. It's dirty. It's dirty stuff. There was a new one. It's, it's a few billion of. Yeah, but I don't, I don't have the numbers in front of me, but I read it in the paper and. Yeah, well, maybe, maybe Core. Maybe Nvidia sees it optimal to keep Core Wave alive, even if it costs them a lot of money to do so.
- [27:31]
A
Yeah. And I keep thinking like, why wouldn't. Is it a bad sign that Zoom would rather do this than invest in their own business, but couldn't have been that they got much better returns than investing in their own business.
- [27:44]
B
They got a lot of cash flow. Still buying back a lot. Yeah.
- [27:49]
A
Yeah. I guess for a company like Zoom, I think. Where are they going to put it? They've tried to expand the product suite and they haven't really been that successful. Okay. I guess I shouldn't say that I haven't followed it that closely, but the. Their core business seems stable and if you feel like you've got a home run investment in the private markets, I suppose, suppose you should take it. We've gone a little long on this here, though. Do we want to talk Tesla earnings? Former big tech, actually. It's just big tech.
- [28:26]
B
Yeah, somewhat in the subscriber chat on Substack, which people should join. It's Completely free. They asked, well, can you hit the big three tech companies, Meta? Microsoft and Tesla, like big three. I see two big tech companies and a midsize automotive company. But that's just, that's just my eyes. The report is interesting as usual. They have a lot of comments by.
- [28:49]
A
Market Cap by Mark Gamps.
- [28:52]
B
It is top 10. Yeah, it is. It is top 10 for sure. I'll say One thing with Tesla is that it's so covered by so many people that they look at every little detail. They're trying to look through like different business filings. Oh, they're about to launch here and there and there. But sometimes we get to look at the forest instead of the trees. And I think annual earnings, Q4 earnings are a good time to do that. Look at the full year numbers. Automotive revenues were down 10% on the year. Other revenues are growing in the double digits. But much smaller businesses. They are. I mean they're not significantly smaller, but they are smaller than the automotive business. Gross profit was down 2%. So you have a little bit of a margin recovery there. Operating income was $4.3 billion company. This is the lowest level they generated in 2021, 2022, 2023 and 2024. Higher operating income in all of those years throughout 1.1 million full self driving subscriptions. That's, that's a lot on the roads in America. I saw that they, you know, maybe that software's getting better. Lemonade, did you see this? Lemonade's offering a discount. If that seems like good marketing for Lemonade. Who. Yeah, I've been completely wrong on that business. But 1.1 million full self driving subscriptions, what would you say per subscribers worth today?
- [30:11]
A
I, I have no idea. How much does it cost? Isn't it like five grand?
- [30:16]
B
No, they eliminated the one time.
- [30:19]
A
So it's okay. It's just on a monthly or annual.
- [30:22]
B
Or let's hit the Google machine. Monthly subscription of $99. Well, what do you think?
- [30:33]
A
What's the lifetime value of a Tesla itself? What's the lifetime in years? Yeah, maybe 10 years. People own it for 10 years for an average. I think you're gonna mark this at like 10k. Yeah. Lifetime value, $10,000.
- [30:48]
B
All right, so right now there's $10 billion worth of value and I know they call it full self driving. It's really driver assist at the moment. Well, the market cap's $1.4 trillion, Ryan, so it's 10 billion worth. $10 billion. Maybe they can get 10 million people to join on this but back to the earnings. They talked about huge increases.
- [31:12]
A
Hold on, is this their services and other revenue?
- [31:15]
B
I assume it would be, yes. That's included in their services. Also the charging stations, things of that nature. And then there's energy, which is all energy generation. No.
- [31:29]
A
Okay, makes sense. Continue.
- [31:31]
B
Okay, let's, let's keep going. They talk about huge increases in AI capacity, AI infrastructure specifically for them. They're also investing $2 billion directly into Xai, which again, there's so many complications here. It's very, very hard to get to everything. They're investing in a lot of battery manufacturing capacity. When I look at this though, you know, they're supposed to be launching the Tesla, Tesla semi truck and the Cyber Cab in full production. They're supposed to be expanding production, but I' just confused how free cash flow is positive while operating margin is down, even though they are entering a large capex cycle. You have R and D for things like Optimus, which is mentioned plenty of times in the quarter. It confuses me how that's how that's possible, just given the slim margins. And look, you see Meta guiding for over a hundred billion. They may have neutral free cash flow next year or barely positive. I, it just, I don't really understand what's happening there. And per usual, you know, it's a lot of vague technology promises in the deck. I was reading through it, trying to get any hard facts. The stock is trading up after hours. Kind of hard to say why that's happening. Where the conference call with Musk is probably going on right now. He usually holds court, kind of has some points he wants to say. But the only other thing I'll look at is the market cap right now is $1.4 trillion. There's still some major SBC dilution coming through. And even without including that, we're trading at 333 times trailing earnings. Feels like Groundhog day with this stock. Each quarter they go, don't worry, don't worry. The next few quarters we're ramping. And then you get a couple quarters later, don't worry, don't worry. Next few quarters we're ramping. And I feel like we've been doing this for the last few years.
- [33:24]
A
Yeah, I mean, despite the different business lines, the fsd, the energy generation storage, this business still revolves around sales of the car. Like full self driving revolves around sales of the car, obviously. Um, it accounts for 75% of their revenue. Automotive sales, Optimus, Sorry, it's not, it does not contribute to the top line yet for the Believers, but that if you look purely at automotive revenue, it's a pretty concerning chart. Like demand's down quite a bit from highs and deliveries are down. Yeah, you've seen, obviously it's a different market, but like BYD for example, deliveries continue to grow and it becomes more competitive. Electric vehicle deliveries across the board probably continuing to grow, like in, in total across all the other companies that have created EVs now. So I just.
- [34:39]
B
It's hard to find the bull case.
- [34:40]
A
I'm cynical. Yeah, it is hard to find the bull case at $1.4 trillion market cap.
- [34:47]
B
And. Yes, yes.
- [34:49]
A
Yeah, if.
- [34:50]
B
Yeah, go ahead.
- [34:51]
A
You could. Like FSD is looking like a pretty good business. It's looking like services to Apple's iPhone, honestly, if you think about it.
- [35:02]
B
Not that problem.
- [35:03]
A
No way.
- [35:05]
B
Once it gets to 100 billion in revenue. Maybe, maybe, sure, sure.
- [35:10]
A
But like, if you compare it to like software revenue to hardware revenue, it seems like it's on the trajectory that services was five years ago. And it is something that hopefully as it gets better, it will cost more for customers. If you're, if you're a Tesla bull, I think that's kind of the thinking there is. There's pricing, power, the. I would like that story. I could, I could buy into that story. Like I'm probably never going to own Tesla, honestly, just because my gripes with musk. But if, if I were a bull, I could buy into that story at the right price. But we're so far from the right price that it just doesn't seem likely. How big? Let me, let me phrase it to you this way. Is there any price where you would own Tesla?
- [36:05]
B
Probably not with the leadership. No. I mean clearly it's a good brand. You can't deny that. But no, and look, there's just, I don't like companies that self deal. I mean they're clearly giving $2 billion to Xai because XAI needs the money and the return on that is very well to be determined. So things like that, I don't like. If, like, here's what I'll say. I could understand the bull case when automotive deliveries were growing and they were taking market share. But now that that's disappeared, you're in a very fragile spot. I just have difficulties finding where, where the ROI is going to be, where if you're at $1.4 trillion market cap, you probably need a path to at least 50 to $100 billion in operating earnings within a decade. Probably $100 billion if you're going to discount that Properly. Where is that going to happen? If full self driving matures, okay, sure you could be doing a couple billion in operating earnings but eh, like where, where, how is that going to affect the market cap? It ain't the analogy to Apple makes sense but it's not $100 billion in revenue probably with $40 billion in earnings they're nowhere close to that.
- [37:25]
A
No. If someone looked at this just with a sober eye, like didn't know who Tesla was, I think they'd be lost on why it's priced the way it is.
- [37:36]
B
If I was a finance professor I would do that. The blind resumes, that would be a fun one to do for classes.
- [37:45]
A
Value this company for me. Without knowing the.
- [37:48]
B
I would probably just get into arguments. I would get into arguments with the students that are like I'm up 200% on Tesla. What are you talking about? That's probably what I would do for an hour. We have questions from the chats. Tyler says what do you guys think happens to Tesla in a bear market? Do you think it will remain mimi a meme stock or could it knock Tesla down to a permanently lower plateau? I think it's going to be a high beta stock. It probably crashes farther than the market. There is a lot of reflex. Maybe not reflexivity. There's a lot of capital in the Musk empire. That's a bit, how do I say it leveraged to all of this stuff and I'd be curious what's going to happen. The other one here which I hadn't thought about. Do you guys think Tesla is improperly accounting for depreciating leases where the loss of the $7,500 tax credit will cause used Tesla values to decrease beyond what was accounted for in the lease? That's logical. I'm not sure if they are. I can't prove anything. But that does seem logical. There's going to be an automotive analysis.
- [38:58]
A
I have no idea.
- [38:58]
B
Much better. I have no idea. Yeah, the automotive analysts will do much better work.
- [39:02]
A
But the one thing I've noticed with Tesla is that trying to get into the accounting trickery and the nitty gritty hurts more than it helps and it tends to have very little. Like throughout Tesla's history as a public company, people have been very right about.
- [39:24]
B
Yeah.
- [39:24]
A
About some of the accounting trickery going on and it hasn't mattered for the stock.
- [39:28]
B
So yeah, they eventually pulled the rabbit out of the hat.
- [39:32]
A
Yeah. And I kind of think now at this point, especially if SpaceX goes public, there's so much money in the Musk empire that he can kind of move stuff from place to place.
- [39:43]
B
That's what he's doing.
- [39:44]
A
The XAI that he can prop stuff up.
- [39:47]
B
SpaceX and Tesla's investing in XAI. That's look $2 billion versus the size of Tesla is not that big of a deal. But I could there's been rumors of SpaceX acquiring Xai which remember merged with Twitter. Slash X. It's all confusing. What if they all merged together? SpaceX?
- [40:10]
A
That was a Josh Wolf theory from a. Well from a while back. Josh Wolf had this theory that it was just all going to be end up being one company called X. I wouldn't doubt it. Tesla and the theory is like from the sun or from the space to earth. The whole expands the whole.
- [40:33]
B
It would be quite a story. It would be quite a story. Here's the last question I have on this company. How many years of kind of the same thing of promises but the financials are treading water. Does it take for the stock to actually go down?
- [40:50]
A
All right folks, before we move on, let's talk about our home for investment research, Fiscal AI. Fiscal AI is the complete stock research platform for fundamental investors. We use it every single day here at Chit Chat Stocks. It has everything you need to research individual companies from 20 years of financial data to company specific segments and KPIs, earnings call transcripts, Morningstar reports and insider ownership data and much much more. And they just lowered the price of their Highest tier by 60%. If you want a complete enterprise grade financial data terminal, check out Fiscal AI. If you use our link Fiscal AI Chitchat, you will automatically get two weeks of fiscal pay Pro for free, no card required. And if you want to upgrade, our link will get you 15 off any paid plan. Again, that's fiscal AI slash chitchat. The link will be in the show notes.
- [41:39]
B
All right listeners, I want to take this time to remind you about the Emerging Moat Stock Research Service, a newsletter that will produce a stock research report every four weeks. Regular updates on existing stocks in the emerging moats universe. We have an upcoming schedule including a research report on Wix.com we have interactive brokers, American Express, Nintendo, Airbnb, Nelnet and much more. Please, if you want reach out and get a complimentary free trial. You can do that by contacting me through the link in the show notes and giving me a DM on substack. I hope you'll try out the service.
- [42:14]
A
I don't know, I just feel like you can keep going on forever.
- [42:22]
B
Forever at some Point, some point it ends.
- [42:25]
A
If it's just stable like this, I could just see it, him finding a new way each quarter to like keep people happy forever.
- [42:32]
B
The carrot can dangle forever. Oh, come on. I don't know.
- [42:37]
A
I said this three years ago.
- [42:39]
B
That's what I'm saying. Yeah. You know, and revenue's down at some point, though. I know at some point it's got a. At some point it will end. It could be five years from now and who knows, maybe they will pull the rabbit out of that. But it does feel like Groundhog Day. All right, ASML last earnings here. Yeah, the big, the big boys. This is turning into a big tech company. Record bookings, 13 billion euros. Gross margin above 50%. Operating margin above 35%. EUV system sales revenue of 39%. They authorize a new buy back program, which might be dangerous at their valuation, but we'll leave that at that service revenue.
- [43:23]
A
Authorized. Important word there. Authorized.
- [43:26]
B
I like it when Wix authorizes $2 billion at a $5 billion market cap. But I would have liked them to do that after my research report was finished. But back to ASML third services. Revenue has grown by 18% since 18% annually since 2012, which is just a really nice part of the growth story. And if we look at the valuation, I think us, any listener would kick themselves that they didn't buy this thing. The EV to ebit went from 20 in July of 2025 to 40 today. Stock's gone on a massive run.
- [44:06]
A
Yeah, should have. I should have paid more attention. Can you guess the average price of an ASML EUV machine in the High NA? 2025.
- [44:22]
B
The High NA or the Just. Just EUV. On average.
- [44:26]
A
Just EUV. On average. In US dollars.
- [44:31]
B
US dollars. 300 million.
- [44:36]
A
Awfully close. $284 million.
- [44:41]
B
Hey, this brand works sometimes.
- [44:43]
A
That's insane.
- [44:44]
B
I think the high NA ones, which is the updated version, like, I don't know why it's called high, but I think it helps with more advanced manufacturing though. Those are pushing 400 to 500 million.
- [44:59]
A
How do you. Do they have a financing arm?
- [45:05]
B
No, their only customers are Intel, Samsung, Micron, tsmc, smic. They all got the money.
- [45:18]
A
Yeah, it's true.
- [45:19]
B
It's kind of like the.
- [45:20]
A
So intel, they're basically selling to the US government.
- [45:24]
B
Yeah, that's true. Yeah, that's fair. Yeah. Did you see Boeing? They're back a little bit. Things have stabilized.
- [45:31]
A
600 deliveries this year. 600 deliveries. They are on the right path. They're getting back to those 2018 levels prior to the max crashes and Covid.
- [45:44]
B
The golden age of Seattle will return. Maybe.
- [45:49]
A
Well, I think a lot of the jobs are relocating. The golden age of Boeing could return without Seattle.
- [45:57]
B
In Charleston, South Carolina. Yeah, the. Yeah, they're interesting and I think it proves that that company, when you have a manufacturing person running it, it does a lot better compared to a finance person. But anything else in asml?
- [46:15]
A
No.
- [46:16]
B
It is.
- [46:18]
A
If you were ranking the best moats, would you put it number one.
- [46:26]
B
In the world?
- [46:29]
A
Yeah.
- [46:30]
B
No.
- [46:31]
A
Might be right. No man who's in public.
- [46:37]
B
It's high. You can argue. You can argue a lot of things. Is it higher than tsmc?
- [46:45]
A
I mean I used to make the argument. Well, I used to make the argument for tsmc, but I've had people smarter than myself explain that they're not alone, they're just ahead. But ASML stands alone, right? I mean I don't know anyone else that's selling $300 million EUV machines that take three airplanes to ship.
- [47:12]
B
That's fair.
- [47:12]
A
I mean they are kind of a bottleneck, but. No, I mean, I guess it's subjective. Maybe Hermes, kind of a different. Different moat altogether, but could be up.
- [47:24]
B
No, they. Come on, there's. There's other ones out there. There's plenty of other ones. Should we talk? Michael Burry and GameStop Starbucks. Did you read this?
- [47:34]
A
No, I didn't read this. Starbucks I wanted to mention. Yeah, it is. It's actually in 100% in no man's land. I have.
- [47:46]
B
I.
- [47:47]
A
It's a business I want to like that I just can't get behind. I had decent comp sales but I kind of might be a Brian Nicol doubter.
- [48:01]
B
He's probably going to do the best he can. What's going to happen in this business? Are they going to get bigger? I don't understand. But he didn't read this. Michael Burry, 8,000 words on GameStop. It's a bit strange. He's a unique man, but he is long. GameStop I think. I think actually definitely go read that to make sure he's actually buying. I don't know if he set a price target lower but either way he's attracted to the setup at the right price. Says he knows it's a bad business, but he believes in Ryan Cohen and the cash shell holding company that has essentially been formed. Ryan Cohen is the runs GameStop now game stop, not GameStop. GME now has a bunch of cash warrants and convertible notes. These get converted to shares at around $30 for GameStop share price or above, which would raise your quote book value per share. Out of thin air. Using financial engineering. Again, this is what Burry is saying in his lengthy report, not me. Burry is arguing that if GME falls to $20 or into the teens, you are buying as a simple bet on co capital allocation. Is he getting too cute here? Maybe it's a bit of a contrarian take because everyone hates GME for fundamental analysis. Because if you're. Yeah, people like us go, I'd never buy it. So it just gets discarded and no one analyzes it. But I feel like you're just getting too cute. You're betting that Cohen's gonna do the right. Not maybe not the right thing's the wrong word, but turn into a Buffett esque Berkshire esque shell conglomerate. And a lot has to go right here. When you're kind of just trading at net asset value with a declining business. Feels. Feels too cute.
- [49:54]
A
There has got to be easier ways to make money than getting back involved with gme. I. It sometimes feels to me like for a guy that sort of builds this Persona that he doesn't want to be in the limelight. He likes to do the most controversial things.
- [50:20]
B
Sensational write up. Yeah, exactly.
- [50:24]
A
Yeah. He wants to get involved with companies that are the hardest to analyze. Whether it's shorts on Tesla, shorts on Palantir. I wouldn't say Palantir is that hard to analyze per se. But the controversial ones, when you would think there's stuff that's like less followed that he could be making money in.
- [50:45]
B
Right. I think it's Nvidia, not Tesla. But either way.
- [50:51]
A
No, I mean way back when.
- [50:52]
B
Way back when, yeah, sure.
- [50:53]
A
To have. Have a short like a few years ago maybe.
- [50:57]
B
Although don't quote us on any of this. Yeah, it feels too complicated to me. I think I have a nice rule of thumb where if you have to write so much over a pitch, like for a, for a stock pitch, then it's too complicated to make sense and too many things have to go right. Yeah. I like a lot of different opportunities, but I felt since his newsletter is very popular, it's obviously GME is an extremely popular stock. It was worth spending a couple minutes on. Should we talk? I'll give you the order here because we have 12 minutes or 10. 12 minutes or so. Silver and gold and dollar devaluation. Small cap of the week from a listener or a bubble watch. What one do you want to go first? These are all my topics.
- [51:45]
A
Let's do the small cap of the week eat our veggies here.
- [51:48]
B
Okay. This is from Cade Invest on Substack. I'd say go check him out. I believe he has his own newsletter. If you need a small cap of the week, consider Vital Farms. Look at the quick elevator pitch. Vital Farms is an ethically sourced egg producer. Contrary to every other player in the egg industry, Vital Farms does not own its own farms. Rather, it works with small family owned farms and sells those eggs under one unified brand. Selling eggs in the store. You probably recognize the branding if you saw it. Not to the store what other eggs producers do. However, the stock price is driven in the short term by social media posts. But what its eggs contain. And one recent incident was when a lab found linoleum in Vital Farms eggs. That can't be good. Actually, I don't even know. No. The next section here says, however, the market overreacted as linoleum has a place in the human diet. They expect $1 billion in annual revenue by 2027, meaning they traded roughly 12 times 2027 operating income if margins stay put. Finally, they have $145 million in cash, which is roughly 10% other market cap. Thank you for your consideration. Nice sign up there like a truth social post. The, you know, the brand seems good, but it's still eggs. That's, it's really. That's really what holds me back.
- [53:09]
A
Yeah, I was thinking the same thing. I read you read the pitch there on the notes and it is kind of an interesting pitch. I love when like consumer scandals happen. I don't know, it kind of gets me more interested. But check this out. I am about to share my screen for all the listeners. Total revenue has grown from. Let's go 2020. It's grown at a 30% annual rate over the last five years.
- [53:43]
B
That's nice.
- [53:44]
A
Operating profit. $80 million over the last 12 months. And you said what, $1.2 billion EV, I think it's at like 14 times operating income. I am interested and I do recognize the brand. I will admit I don't have expertise in the egg industry by any means.
- [54:08]
B
Well, remember when prices were soaring? I feel like I've heard the pitch that they're a little more insulated from the cyclicality of the normal egg prices because they go for these local farms. So they're always going to be priced at a premium. When we've seen egg prices just balloon and then crash. Kind of like a nice cyclical industry. Same as cocoa. And what else? Well, Coco's also chocolate, coffee, in the last few years it feels like a solid brand, but I just can't. Where, where's the moat? Maybe if you were really confident on management capital allocation and the growth trajectory and price stability. If you're confident on those four things. That's what, that's what I'd want to check out before, before getting interested here because, you know, valuation looks okay.
- [55:03]
A
Yeah, yeah, the numbers look good. I am going to pull up a chart here, Brett, that will lead us to our next segment. This Here is the one year returns of the iShares Silver Trust. Oh, 300% over the last year. Yes. What is happening?
- [55:30]
B
I will try to figure it out. Have someone in the comments that says having a great month because of gold. I'll be talking about gold too. 21% of the portfolio. Hey, that's been a nice, it's been a nice run for metals here. You can't deny it. The. Well, let's talk about silver first. It's up to $113. It was at $30 at the start of last year. Ryan mentioned hundreds of percent in the last year or so. I guess silver. I was trying to look up reasons why this is happening, theories why this is happening. Silver is much more illiquid than gold. It can swing wildly and apparently silver is used in AI infrastructure. And the theory is that we're going to have a shortage which is driving price momentum. At the same time, China also enforced export restrictions. So there's this narrative out there, people are driving the price and then it becomes a trading tool where people are day trading it. I saw the volume on SLV was just skyrocketing with silver. I'm sure it takes a while to get mines online and gold and silver mines are notoriously the liars with a hole in front. What's the Mark Twain quote? A mine is just a hole with a liar in front of it. Right? Something like that. A hole in the ground with a liar.
- [56:41]
A
I don't know.
- [56:42]
B
That's. It's something along those lines. Either way, there's a lot of gold and silver mines that talk about mining and then don't actually do much. But I'm sure the cure for high prices will be high prices where there's enough silver out there in the world and more will be mined at this higher price. But in the short run, it felt like something that. Yeah, it totally makes sense what happened. I mean you kind of have almost a short squeeze mentality and then you have supply getting restricted by China. It's quite interesting. Now gold's a different story because it's purely on, you know, debasement fears. It's purely on people scared of dollars, fiat currency, stuff like that. And now in this month, gold has broken out. It's up to about 50, $300 an ounce. Apparently China's buying up a bunch of gold and our old friends haven't heard this name in a long time. Tether. Welcome back to the party. They are in any bull market you could, you could hope for. They are buying one or two tons a week, about 2% of global demand as a backing to its stable coins. They also launched a gold backed stablecoin of some regard. Although I get confused on all this stuff. My question though is right away, if the price of gold collapses, doesn't the collateral behind the stable coins get wiped out? You know, I'm just asking questions now. At the same time you have dollar debasement fears. The dollar index set its lowest level in years but is nowhere near what you would call a collapse versus any historical average. And there had been a lot of talks from the US administration about being okay with the dollar going down in value and they're not going to intervene here. But they would also actually like currencies such as the Japanese yen to revalue kind of similar to what happened in the Plaza Accords of 1985 to make the dollar cheaper for exports. Where for example, if you go to a country like Japan you'll find that even though it's the same first world country, stuff like if you're paying in US dollars, stuff like food is half the price, which doesn't really make sense now switch that to manufacturing. For a company like a country like China, Japan or countries around Asia, you can see that it puts the United States at a disadvantage in that regard. So the you can there there's incentives for why they would want the dollar to go down. And maybe people are seeing that that's why gold is skyrocketing. And then at the same time, bitcoin is still below $90,000 USD. It is not rising along with gold and silver. My thought, there's a lot of stuff here. If you're a stock investor, keep looking for stocks with international exposure or just international stocks in general. You may have holders. Just for example, if you think the dollar is going to go down, I'm a Mexican airport guy. That their earnings will be higher in US dollars if by 10% of the dollar goes down by 10% versus the Mexican peso. It's just that simple. And there might be some hedging in there. But you can think of it like that. And as we learned from Li Lu in our study overview of him, he added to his framework in the later years, you want to maintain purchasing power in the place that you're spending money. And this is something I think a lot of people are thinking about. You also probably are going to have potentially people holding US Treasuries that are international buyers worried about dollar debasement because if the value of the dollar goes down versus their currency. Well, if you bought US treasuries, then you get that 3% interest but the dollar went down by 10%, you actually lost money. There's probably worries from international investors. Overall, I think the incentives are for the dollar to weaken and for probably the US government to lead that People are speculating that. There's been some commentary from the President and other people around that is interesting. Is interesting. I don't own any of this stuff outside of some international stocks. But what are your thoughts, Ryan?
- [60:55]
A
Congrats to everyone who has owned silver or gold over the last 12 months. The I don't know the industry very well. I don't know if there's like big barriers to entry for miners, like mining silver, is it restrictive, are there regulatory issues, all that stuff. I assume there's, you know, some level of barriers to entry. But my, my concern. I saw a picture of like a commodities conference. Like a. It was, I think like a. I don't know exactly what it was, but someone took a picture and said like at the commodities conference and the place was packed, like standing room only to listen to people speak about this. And it just. And the guy said like basically it's now I've never seen it this packed. So many people are showing up.
- [61:49]
B
And he was excited from the big short. That's the scene from the big short.
- [61:55]
A
Right, Right. It's what I'm thinking is, isn't that not what you want? Because it would almost be better, I imagine, for silver and gold mining companies, for silver and gold investors, for this to happen over a more gradual time period. Because the sheer speed of this price rise is going to draw capital to the industry faster, which is going to like all cycles, I imagine, increase supply, drive down cost. So I could be wrong again with like maybe the barriers to entry are higher than I think. But I don't see a world where it doesn't start to. This massive price increase doesn't become the cure for its own price increase. I guess that's kind of the motto in the commodities world. High prices are the cure for high prices.
- [62:53]
B
That's the toughest thing about this market is if you're looking at, all right, I have exposure to silver, I have exposure to gold or something like that. Well, what point do you sell? And it's a lot different than a stock where you can go, all right, I'll sell. Maybe sell if it gets to an extreme multiple of 50 times, 60 times, something like that. Maybe higher if it's a high growth stock. But you can kind of hold and let the compounding take care of itself. Yeah, it's tough. It's tough to decide when to sell because you're almost like, all right, 90, 100, 110. It's just arbitrary. It's kind of just like a casino price in your mind is just waiting on, waiting on the, the horse track. Yeah, I agree. That's the hardest part about this. But it's good call by everyone that has been in on the medals. I feel like when something goes up 100% or 3 or 400% in a year, that that's, that's a little hint that you might need to take some chips off the table. Should we close out Ryan with a I want to read this bubble watch headline? Did you see this? Yeah, I did not. Well, this is in the Wall Street Journal this morning. This $14 billion meme stock says it is developing a herbal remedy for autism. Here's a quote. Despite recurring losses, no revenue and no sellable products, Regency finished last week with a $15.5 billion stock market value of 50% since year end and 126 fold since its initial public offering in 2021. Only spent $1 million on R& D last year. Bringing a drug to market can cost significantly more than that. Here's a quote. Despite these precarious fundamentals for all but the most daring traders, which ensel is an actionable shorting, it can be even riskier than holding it. Chief Executive owns 89% of the company, meaning the public load is thin and the stock is prone to explosive short squeezes. Cost of buying the shares for a short sale is exorbitant. If an investor can find someone to lend them, eventually the company is going to have to raise money. Oh, well, this is my thoughts. Eventually the company is going to have to raise money and that feels like the right time to short as it will add more to the outstanding float at a larger market cap. It's quite fascinating that this is happening and is allowed to happen. Is it Cayman Islands Corp. It's just Chinese Scam Co. And the NASDAQ is just saying, go ahead, list. Strange to me.
- [65:15]
A
It kind of puts like the CEO here is sort of in no man's land, though, because I feel like I've said that a lot today, but he's basically got $15 billion essentially in paper net worth tied up into this thing. But one of the primary reasons that his paper net worth is that high is because he owns so much of it and the float is so thin. So, like, if he sold it, he's going to drive down his own price. You kind of see what I'm saying, where it's kind of the trap with lockup periods post ipo, it's like, yeah, you could. It's not that bad. If you own a small chunk, you can get rid of it. You can realize the value. But if you own 89%, you got to file a Form 4 or whatever, announce you're selling. You're kind of. You're going to have to eat some drawdowns.
- [66:13]
B
He's not going to be worth $10 billion for. He's not actually worth $10 billion. He might be on paper for a year, but they better pull some miracle thing out of that here. Yeah. All right, well, going along, Ryan, anything before I close things out for the listeners?
- [66:32]
A
Nope. I think that's going to do it. I'll let you take us out.
- [66:36]
B
All right. As a disclosure, we are not financial advisors. Anything we say on this show is not formal advice or recommendation. Ryan, I or any podcast guests may hold securities discussed in this podcast, may have held them in the past and may buy, sell, or hold them in the future. Thank you, everyone, for tuning in, and we'll see you next time.